Fantino Inc. presented the following data:
Net income ......................... $5,500,000
Preferred shares: 50,000 shares outstanding, $100 par,
8% cumulative, not convertible .................. $5,000,000
Common shares: Shares outstanding, Jan. 1, 2012 .........650,000
Issued for cash, May 1, 2012..................100,000
Acquired treasury stock for cash, Sept. 1, 2012 (shares cancelled)....150,000
2-for-1 stock split, Oct. 1, 2012
Instructions
(a) Calculate earnings per share for the year ended December 31, 2012.
(b) Discuss what the effect would be on your calculation in (a) if the stock split had been declared on January 30, 2013, instead of on October 1, 2012, assuming the financial statements of Fantino Inc. for the year ending December 31, 2012, were issued after January 30, 2013.